AUSTIN >> An El Paso man who is a member of the Texas Finance Commission said Friday that the Legislature should consider further regulation of the payday-lending industry.

Bank of the West CEO Larry Patton said the commission has been told that payday lenders charge higher interest in Texas than in any other state. Patton said the commission and the Legislature should study whether that's true. If it is, he said, the Legislature should consider crafting a law that would rein in the industry.

Payday lending has been a big issue in the Texas gubernatorial debate since state Sen. Wendy Davis, the Democratic candidate, called late last month for Gov. Rick Perry to remove William J. White as finance commission chairman.

REPORTER

Marty Schladen

The commission oversees the agency that regulates payday lenders, and White is a vice president of Cash America, a payday lender that in November was sanctioned by federal authorities for abusive practices.

Davis called for White's removal in response to comments he made to the El Paso Times. In response to allegations that payday lenders trap vulnerable borrowers in debt, White said people couldn't repay payday loans because they're guilty of bad financial decisions, such as buying $6,000 TVs.

Patton said he's not sure whether it would be proper for him to say whether he supports White or thinks he should be removed.

"The question in my mind is, is it appropriate for him to remain as the chairman and is it an issue that the other commissioners should address, or is it outside our purview?" White said. "I'm trying to get some direction on that."

Patton said he hasn't seen White do anything wrong in any commission meetings.

"From my perspective, as far as Bill's activity on the commission and running the meetings, I've never seen him act inappropriately," Patton said. "I've never seen him make inappropriate comments."

Patton said he thinks the commission and the Legislature should study White's industry and the Legislature should consider further regulation.

"The banking world is a regulated world, I would say, compared to payday lending," Patton said.

Payday lenders charge annual interest in excess of 500 percent and the number of industry storefronts in Texas has increased tenfold since 2004 to more than 3,500.

Patton said that demand for action by the Legislature appears to be coming from communities.

"I think there's enough commentary in the communities that they ought to take a look at it," he said. "It's coming from constituents across the state."

Patton differs with the way many Texas cities — including El Paso — have tried to rein in payday lenders. The El Paso City Council voted earlier this month to begin enforcing a year-old ordinance that limits the payday loans as a share of a borrower's income and the number of times the loans can be rolled over.

Cash America said it closed 28 stores in Texas between October and December because of local ordinances like the one in El Paso, the Fort Worth Star Telegram reported Thursday.

In 2012, the finance commission passed a resolution calling on the Legislature to pre-empt such local ordinances.

The Texas Municipal League objected and said it probably isn't legal for such a commission to lobby for legislation.

Other critics said the resolution was an industry-driven attempt to limit regulatory authority to the Legislature, where industry groups have spent $3.7 million since 2009 to keep reforms from occurring.

Under the Texas Public Information Act, the Times requested all communications between White, payday lenders, the commission and Perry regarding the resolution. On Thursday, the commission said no such communications exist.

Patton said that doesn't surprise him.

"I reported that I had nothing to provide," he said. "I'm not surprised that the others had similar results. The commission members don't tend to communicate with each other through emails."

Patton denied that the resolution was intended to bottle up payday-lending reform in the Capitol so lobbyists can kill it there.

"That resolution was passed because the feeling of the commission members was this is an issue that the state Legislature needs to deal with," he said. "If we're going to get something done, it needs to be at the state level. That's where you have the enforcement staff."

He later added, "If you have municipalities all over the state setting up their own ordinances, that sounds good, but where is the enforcement going to come from? It needs to be addressed, I think, but I don't think that (local ordinances) are the answer and that's why that resolution was passed."